Deborah Solomon's interesting A1 Wall Street Journal story about the US Treasury's concerns that the world may not be quite as open to US direct investment as it used to be didn't mention that fact. It focused instead on the "perception that the US -- the world's largest recipient of foreign direct investment -- is erecting new barriers to foreign capital."

But the fact that both China and Russia save more than they invest and are net lenders -- not net borrowers -- from the rest of the world seems rather relevant. Both are, I suspect, growing tired of taking funds that foreign investors bring in looking for big -- 10, 15, or more -- returns and sending them back to the US where they get 5% in the Treasury and Agency market.

That kind of swap may generate dark matter for the US, but it isn't obviously in the interest of the world's emerging economies.

Of course, the fact that they cannot swap equity for equity, and use the funds brought in by private investors to the US to add to their state investment company's holdings of US equities may play a role as well ...

One thing I consistently notice in these kinds of stories. US officials -- and even more so US businessmen -- still tend to talk as if the US is an investor in the world, not the world's biggest borrower.

On a stock basis, that is still (sort of) true. Total US external liabilities exceed total US external assets, but thanks to the strong performance of non-US markets over the past few years, US equity investments abroad are worth more than foreign equity investment in the US.

On a flow basis, though, it is off. The US borrows a ton from the rest of the world every year to finance its current account deficit, that is to say US investment that exceeds domestic savings. Any additional US investment in the rest of the world has to be financed by borrowing even more from the rest of the world.*

And you can sort of see why the United States' creditors might not think that is totally in their interest ...

* footnote: US equity investment abroad could also be financed by foreign equity investment in the US. indeed, that generally has been the case in recent years. But in q1, US outward FDI topped inward FDI by about $50b, so the US really has financing its outward investment with debt, including a decent amount of debt placed with the Russian and Chinese government.

UPDATE: A bit more from Naked Capitalism. He raises several good points. Opposition to leveraged buyouts isn't quite the same as opposition to greenfield FDI. And, as Rodrik notes, there will come a point where sovereignty and further economic integration do come into conflict. And for the US, the emergence of large sovereign wealth funds may imply that this point comes sooner rather than later. After all, it is hard to see why Americans are likely to be comfortable with foreign governments taking large equity stakes in the US firms when they generally don't think the US government should take big equity stakes in the US firms ... different models of capitalism and all.